Identity crimes are a significant problem in society. Identity crimes include identity theft, identity fraud, identity cloaking, check counterfeiting, and other crimes. Some specific examples of identity crimes include credit card theft, check theft, medicare fraud, ATM card theft, and minors using fake identifications to obtain admittance to a bar or adult-only Internet sites. Many other examples of identity crimes abound around us. Despite new laws designed to combat identity crimes, it is still easy for a criminal to take out loans in someone else's name, to run up enormous credit card debts and tap into bank accounts.
Numerical identifiers such as credit card numbers and social security numbers were originally designed to serve as means for verifying a person's identity. However, these numerical identifiers are easily obtained by a criminal. For example, a credit card receipt can be easily removed from a waste basket to obtain the credit card number. Social security numbers are often requested to be entered on all kinds of forms. Any person later coming into contact with such forms can easily obtain the social security number.
Various technologies have been devised in attempts to solve the problem of identity crimes. For example, biometrics such as fingerprint recognition equipment can be used to determine or confirm a person's identity by scanning the person's fingerprint and comparing it to an earlier stored fingerprint of the person. Retinal scans or DNA analysis can also be used to identify a person. Such equipment is very expensive to replicate on a large scale.
Banks often use a personal identification number (PIN) to verify the identity of a person. A bank customer is required to enter his or her PIN prior to withdrawing cash from his or her account. This PIN is a static number (i.e., it does not change for each transaction) and it can be reused over and over again. Therefore, there is a risk that a criminal can obtain a PIN number from a previous transaction and simply reuse it to perpetrate a crime. In other words a PIN number must be kept hidden even after it is used. Furthermore, PIN's are specific to a single account and are not used universally to all types of transactions in a person's life.
Another example of a situation in which verifying a person's identity is important is in preventing children from entering adult-only establishments. For example, bars and nightclubs often need to determine the age of a patron to ensure that the patron is not a minor. Typically these establishments use a patron's driver's license to ascertain their age. However, minors often obtain fraudulent drivers licenses by inserting their photograph into a stolen or otherwise obtained driver's license of an adult. Similar methods may be used to falsely assert an older age for purchasing cigarettes or alcohol. Use of fingerprint or other recognition equipment is typically too expensive for these establishments and therefore enforcement of the laws is difficult.
The recent advances in commercial transactions over the Internet have also created an interest by purchasers in verifying the identity of the entity they are doing business with. Before providing a credit card number to purchase an item or transact some form of business, the person desires to gain some assurance that the entity with whom they are transacting the business is reputable.